AVIATION – FINANCIAL SANCTIONS
From 1 January 2025 (that date was extended from 20 December 2024 by the fourteenth package of EU sanctions against Russia), all contracts for the export of specific types of goods from the EU to certain third countries concluded before 19 December 2023 must include a 'No Russia Clause' unless they have already expired with no remaining obligations.
For more information, read the latest insights from our Aviation Group: Aviation: Sanctions Update: European Commission updates Guidance on 'No Re-Export' clauses.
BANKS – 2025 STRESS-TEST
The EBA's 2025 EU-wide stress test for banks will formally start in January 2025 following the release of the macroeconomic scenarios. Results are due to be published early in August 2025.
BANKS – HEDGING OF COUNTERPARTY CREDIT RISK EXPOSURES
The Basel Committee on Banking Supervision (BCBS) recently published a consultation on technical amendments on the hedging of counterparty credit risk (CCR) exposures, which closes for responses on 31 January 2025. The consultation sets out proposed amendments to the BCBS standards on credit risk and CRR relating to scenarios where a bank has a derivative exposure and uses a guarantee or credit default swap to hedge the CCR arising from the derivative counterparty.
BANKS – SINGLE SUPERVISORY MECHANISM
The closing date for responding to the European Central Bank's consultation on changes to its policies on options and discretions (O&Ds) for banks in the single supervisory mechanism (SSM) has been extended to 24 January 2025.
As part of the consultation, the ECB published revised drafts of the four instruments that comprise the O&D framework: the Guide (which deals with the exercise of O&Ds on a case-by-case basis), the Regulation (which deals with the exercise of several generally applicable O&Ds relating to significant institutions), the Recommendation (addressed to national competent authorities (NCAs) regarding the exercise of O&Ds applicable on a case-by-case basis in relation to less significant institutions), and the Guideline (addressed to NCAs regarding the exercise of generally applicable O&Ds relating to less significant institutions). Most of the changes are needed due to CRR 3 and the related CRD VI Directive which amend some existing O&Ds and introduce new ones.
CAPITAL REQUIREMENTS REGULATION
CRR 3 (the amendments to the Capital Requirements Regulation) is directly effective in Ireland from 1 January 2025 (save for the provisions which amend the calculation of own funds requirements for the market risk regime which have been pushed out by one year to January 2026).
The European Banking Authority (EBA) recently published amendments to its final draft implementing technical standards (ITS) on the supervisory reporting and disclosures of investment firms. The existing ITS needed updating in light of CRR 3 (the amendments cover supervisory reporting requirements on counterparty credit risk, market risk and credit valuation adjustment risk). The EBA didn't consult on the planned changes as they are not regarded as significant. The amendments are expected to be published in the Official Journal shortly, with an application date of 1 January 2025.
CORPORATE SUSTAINABILITY REPORTING DIRECTIVE (CSRD)
The reporting obligations under the CSRD apply on a phased basis. For financial years commencing on or after 1 January 2025 (reporting year 2026), reporting will commence for the second phase of reporting companies, which includes large companies (other than those in scope for the first phase of reporting).
For more information, read the latest CSRD-related insights from our ESG Group here: Irish CSRD Obligations Amended and CSRD: Transposition into Irish Law
ESMA - FEES
Simplified rules relating to fees charged by ESMA to credit rating agencies, securitisation repositories, trade repositories and certain benchmark administrators apply from 1 January 2025 (see here and here for trade repositories, here for securitisation repositories, here for benchmark administrators, and here for credit rating agencies).
EU GREEN BOND STANDARD (GBS) REGULATION
The EU GBS Regulation has been directly effective in Ireland since 21 December 2024. Domestic Irish regulations will be needed regarding administrative penalties and other appropriate administrative measures for breaches of the Regulation – these are expected shortly.
There is a transitional period to facilitate the provision of services by external reviewers while ESMA is putting its registration and supervision framework in place (that period runs from 21 December 2024 to 21 June 2026).
A small number of the Regulation's provisions will not apply until 21 June 2026 (relating to the equivalence framework for third country external reviewers).
Final draft technical standards are expected to be submitted by ESMA to the European Commission shortly arising from its consultation in 2024 on the first batch of its technical standards under the EU GBS Regulation. That consultation covered mandates relating to the registration and supervision of external reviewers. The remainder of ESMA's mandates under the EU GBS Regulation (again, the focus will be on external reviewers) will be addressed in a second consultation package to be published in Q1 2025.
For more information on the EU GBS Regulation, read our insights here: Green Bonds: EU Green Bonds Regulation will apply from 21 December 2024 and EU Green Bond Regulation published in Official Journal: key points for issuers.
EUROPEAN MARKET INFRASTRUCTURE REGULATION (EMIR)
The new active account requirement (AAR) under EMIR 3.0 was contentious during trilogue negotiations and will be a key focus throughout 2025 now that EMIR 3.0 has been published in the Official Journal. In-scope financial counterparties and non-financial counterparties will need to set up an active account by 25 June 2025.
ESMA's AAR-related consultation on operational conditions, the representativeness obligation for the most active counterparties, and reporting requirements was launched before EMIR 3.0 was published in the Official Journal and closes on 27 January 2025.
For more information, read our insights here: EMIR 3.0 comes into force on 24 December 2024 and EMIR 3.0 Update and the Active Account Requirement.
INSURANCE – SOLVENCY II CONSULTATION UPDATES
- EIOPA's series of consultations on regulatory technical standards (RTS) and ITS regarding changes to be introduced to the insurance regulatory framework as part of the Solvency II review process closed for responses on 2 January 2025. Those consultations related to liquidity risk management, exceptional sector-wide shocks, undertakings under dominant/significant influence or managed on a unified basis, scenarios for best-estimate valuations for life insurance obligations, and enhancing the supervision of cross-border activities.
- EIOPA's consultation paper on draft technical advice on standard formula capital requirements for investments in cryptoassets within the EU regulatory framework for insurers closes for comments on 16 January 2025. The European Commission requested the advice in May 2024 as part of its review of specific items in the Solvency II Delegated Regulation. In preparing its proposed response, EIOPA looked at EU insurers' crypto holdings and the risk inherent in such holdings. It found that investment of (re)insurance undertakings in cryptoassets is currently immaterial and their prudential treatment is not sufficiently clear. It also found that cryptoassets are high-risk investments which may result in total loss of value. It outlined four possible policy options and recommended option 3 which would involve a 100% haircut to insurers' cryptoassets regardless of their balance sheet treatment and investment structure. It is due to provide the technical advice to the Commission by 30 June 2025.
- EIOPA's public consultation on the future implementation of the new proportionality framework under Solvency II closed on 25 October 2024 and EIOPA is due to submit final advice to the Commission by 31 January 2025. That consultation looked at fine-tuning the methodology for classifying insurance undertakings as small and non-complex, and the conditions for granting similar proportionality measures (i.e. certain reduced requirements) to insurers that do not by default fall in the small and non-complex category.
- EIOPA public consultation on technical advice to the Commission regarding the standard formula capital requirements for insurers' exposures to qualifying central counterparties (CCPs) closed on 23 October 2024. Solvency II included a specific treatment for indirect clearing for derivatives, but not for direct clearing (meaning that direct exposures to CCPs would be treated as bilateral exposures and result in higher capital requirements). EIOPA proposed three policy options: no change to the current regime; extending the treatment of indirect exposures to direct exposures; or further aligning the treatment of default fund contributions with the Capital Requirements Regulation (the latter is EIOPA's preferred option). EIOPA is due to provide its final advice to the Commission by 31 January 2025.
- Under the upcoming changes to the Solvency II Directive, there will be new requirements for insurance or reinsurance undertakings and groups regarding the inclusion of macroprudential analyses in the own risk and solvency assessment (ORSA) and in the prudent person principle (PPP). EIOPA's consultation regarding the criteria based on which national supervisors may request (re)insurers and insurance groups to perform macroprudential analysis in their ORSA and in their application of the PPP closes on 9 January 2025.
MARKETS IN CRYPTO ASSETS REGULATION (MICA)
MiCA has applied to crypto asset service providers (CASPs) since 30 December 2024.
Commission Implementing Regulation (EU) 2024/2902 with implementing technical standards on the reporting related to asset-referenced tokens (ARTs) and e-money tokens denominated in a currency that isn't an official currency of a Member State apply from 1 January 2025. ART issuers must report specific information to their competent authorities on a quarterly basis.
MIFID II – RESEARCH
ESMA's consultation on changes to the research provisions in the MiFID II Delegated Directive closes on 28 January 2025.
The Listing Act will enable joint payments for execution services and research for all issuers, irrespective of the market capitalisation of the issuers covered by the research (and the changes that are the subject of the consultation are designed to align Article 13 of the MiFID II Delegated Directive with that new provision). ESMA is due to give its technical advice to the Commission in Q2 2025.
MIFIR REVIEW
As part of the changes to MiFIR introduced in 2024, the provisions regarding transaction data reporting in Article 26 and order book record keeping in Article 25 were amended. This necessitates changes to the corresponding technical standards (RTS 22 and RTS 24). ESMA's consultation on updates to RTS 22 and RTS 24 closes on 3 January 2025 and ESMA then plans to publish a final report and submit the two sets of final draft amending RTS to the Commission by the end of Q2 2025.
Separately, following ESMAs announcement of next steps for the selection of Consolidated Tape Providers (CTPs) for bonds, shares and ETFs, ESMA launched the selection procedure for the CTP for bonds on 3 January 2025 (with a reasoned decision on the selected applicant to be given by early July 2025). The selection procedure for the CTP for shares and ETFs will be launched in July 2025.
OPERATIONAL RESILIENCE
The Digital Operational Resilience Act (DORA) applies from 17 January 2025 to a wide range of financial entities, including credit institutions, electronic money institutions, investment firms, insurance undertakings and re-insurance undertakings.
For more information (including details of our DORA Toolkit), visit our dedicated webpage here.
The Joint Committee of the European Supervisory Authorities (ESAs) published a statement calling on financial entities and ICT third-party service providers to advance their preparations so they are ready to comply with DORA and its associated technical standards and guidelines from 17 January 2025. The ESAs emphasised that, as there is no transitional period for DORA implementation, financial entities must adopt a robust and structured approach to meet their obligations on time.
Regarding January 2025 application dates for standards and guidelines under DORA:
- The Joint Committee of the ESAs joint guidelines on the oversight co-operation and information exchange between the ESAs and competent authorities under DORA apply from 17 January 2025.
- The Commission's recently-adopted a Delegated Regulation with RTS on the harmonisation of conditions enabling the conduct of oversight activities in the EU is due for publication in the Official Journal shortly and is expected to apply from 17 January 2025.
EIOPA's Guidelines on information communication technology security and governance issued in the context of Solvency II will be withdrawn with effect from 17 January 2025 in light of DORA coming into force to eliminate any overlap. EIOPA expects NCAs to make any necessary adjustments to their national frameworks to remove any corresponding duplication.
PAYMENTS
- Instant Payments Regulation: 2025 will see a number of key deadlines for payment services providers (PSPs) under the EU Instant Payments Regulation. Euro-area PSPs must provide the payment service of sending instant credit transfers in euro by 9 October 2025 and the payment service of receiving credit transfers by 9 January 2025. The Commission has published Q&As clarifying requirements of the Instant Payments Regulation which reiterate that PSPs have to comply with their first set of obligations under the Regulation from 9 January 2025. The Q&A cover scope, payee verification, sanctions screening, instant credit transfer charges, and penalties and reports.
- Revised EU Payment Services Framework: The revised EU payment services framework is a priority item for the new EU Commissioner (see the mission letter for those priorities). It is hoped that trilogue negotiations between the Council and Parliament will begin in H1 2025. Combatting payment fraud, levelling the playing field between banks and non-banks, improving the open banking framework and improving the availability of cash are key pillars of that June 2023 Commission proposal.
- Financial Data Access Framework: Following confirmation from the Council that it had agreed its negotiating position on the proposed framework for financial data access, trilogues are expected to begin in H1 2025 with the aim of finalising the framework for publication in the Official Journal by the end of 2025.
RETAIL INVESTOR PROTECTION
The IOSCO roadmap for retail investor online safety comprises five 'waves' of targeted actions planned over the course of 2025. As part the first wave of the roadmap, IOSCO consulted on Finfluencers: (looking at the evolving finfluencer landscape, the associated potential benefits and risks, and the current regulatory responses across jurisdictions); Digital Engagement Practices: (i.e. notifications, nudges and gamification); and Online Imitative Trading Practices: Copy Trading, Mirror Trading, Social Trading: (in particular imitative trading strategies such as copy trading, mirror trading and social trading which are aimed at allowing retail investors to replicate automatically the trades of more experienced or professional traders). Those consultations close for responses on 20 January 2025.
SUSTAINABLE FINANCE DISCLOSURES REGULATION (SFDR)
The Platform on Sustainable Finance (which advises the Commission on the EU Taxonomy and the wider sustainable finance framework) will hold a webinar on 21 January 2025 on its recent proposal, set out in a Briefing Note for the Commission, for a categorisation scheme as part of the review of the SFDR.
The Platform has recommended a transition from the existing disclosures regime to a product categorisation system – there would be three distinct categories of products, and all products not falling into a distinct category would be termed as "unclassified". The proposed categories would allow products to be differentiated based on whether they can largely be considered sustainable, whether they foster the transition to net zero, or whether they exclude sectors/companies based on ESG performance:
- Sustainable: Contribute through taxonomy‑aligned investments or sustainable investments with no significant harmful activities or assets based on a more concise definition consistent with the taxonomy.
- Transition: Investments or portfolios that support the transition to net zero and a sustainable economy, and avoid carbon lock‑ins.
- ESG Collection: Exclude significantly harmful investments / activities; invest in assets with better environmental and/or social criteria.
The Commission had previously noted that the "SFDR was designed as a disclosure regime, but is being used as a labelling system, suggesting that there might be a demand for establishing sustainability product categories."
For more information, read our insights here: Sustainability Developments: Possible Omnibus Simplification Package for Reporting; Possible move from SFDR Disclosures to Categorisation and Sustainable Finance Update: Commission consults on SFDR.
SETTLEMENT / CENTRAL SECURITIES DEPOSITORIES REGULATION (CSDR)
Final reports in respect of the two sets of technical standards (information to be provided by European CSDs to their national competent authorities for review and evaluation, and information to be notified to ESMA by third-country CSDs) are expected to be submitted by ESMA to the Commission by 17 January 2025.
Other planned ESMA CSDR-related consultations will follow in the coming months (covering settlement discipline, measures to prevent settlement fails, deferred net settlement).
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
